Circular Da Ted 10 September 2018
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CIRCULAR DATED 10 SEPTEMBER 2018 (a real estate investment trust constituted on 10 October 2013 under the laws of the Republic of Singapore) managed by OUE Commercial REIT Management Pte. Ltd. THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. CIRCULAR DATED 10 SEPTEMBER 2018 CIRCULAR DATED CIRCULAR TO UNITHOLDERS IN RELATION TO: IMPORTANT DATES AND TIMES FOR UNITHOLDERS (1) To approve the proposed Acquisition of the Last date and time for Wednesday, 26 September 2018 at 10.00 a.m. Office Components of OUE Downtown lodgement of Proxy Forms (2) To approve the proposed Rights Issue Date and time of Friday, 28 September 2018 at 10.00 a.m. Extraordinary General (3) To approve the proposed Payment of the Meeting Sub-Underwriting Commission Place of Extraordinary Raffles City Convention Centre General Meeting Stamford Ballroom, Level 4, Fairmont Singapore, 80 Bras Basah Road, Singapore 189560 Joint Lead Managers and Independent Financial Adviser to the Independent Sole Financial Adviser to the Underwriters Directors and the Audit and Risk Committee of OUE Acquisition for the Rights Issue Commercial REIT Management Pte. Ltd. and to DBS Trustee Limited (as trustee of OUE C-REIT) for the Acquisition Deloitte & Touche Corporate Finance Pte Ltd (Incorporated in the Republic of Singapore) (Company Registration No.: 200200144N) Singapore Exchange Securities Trading Limited (the “SGX-ST”) assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. If you are in any doubt about its contents or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Approval in-principle has been obtained from the SGX-ST for the listing and quotation of the Rights Units (as defined herein) in OUE Commercial Real Estate Investment Trust (“OUE C-REIT”) on the Main Board of the SGX-ST and the Rights Issue (as defined herein). The SGX-ST’s in-principle approval is not an indication of the merits of OUE C-REIT, the proposed Acquisition (as defined herein), the proposed Rights Issue (as defined herein), the Rights Units and/or the proposed Payment of the Sub-Underwriting Commission (as defined herein). If you have sold or transferred all your units in OUE C-REIT (“Units”), please forward this Circular together with the Notice of Extraordinary General Meeting and the accompanying Proxy Form immediately to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. This Circular may not be sent to any person or any jurisdiction in which it would not be permissible to deliver the Rights Units and the “nil-paid” provisional allotment of Rights Units to Eligible Unitholders (as defined herein) under the proposed Rights Issue (the “Rights Entitlements”) or make an offer of the Rights Units and the Rights Entitlements and the Rights Units and Rights Entitlements may not be offered, sold, resold, transferred or delivered, directly or indirectly, to any such person or in any such jurisdiction. The Rights Units and Rights Entitlements have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or under any securities laws of any state or other jurisdiction of the United States (the “U.S.”) and may not be offered, sold, resold, allotted, taken up, exercised, renounced, pledged, transferred or delivered, directly or indirectly, within the U.S. except pursuant to an applicable exemption from, or a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the U.S.. There will be no public offering of the proposed Rights Units and/or Rights Entitlements in the U.S.. The Rights Issue is being made available only to investors and Unitholders outside the U.S. in reliance on the safe harbour provided by Regulation S under the Securities Act. The overview section is qualified in its entirety by, and should be read in conjunction with, the full text of this Circular. Meanings of defined terms may be found in the Glossary on pages 54 to 64 of this Circular. TRANSACTION OVERVIEW Acquisition of OUE Downtown 1 Office Component and OUE Downtown 2 Office Component OUEOUE DowntownDowntown 1 OUE C-REIT’s second acquisition since IPO and a strategic addition OOcece of a new Singapore CBD submarket to the portfolio CoComponentmponent Independent Savills: S$927.0 million (S$1,749 psf) OOUUE Valuation(1) Colliers: S$945.0 million (S$1,783 psf) DoDowntownwntown 2 S$908.0 million (S$1,713 psf) OOcece Purchase Translates to a 2.0% to 3.9% discount to CoComponentmponent Consideration independent valuation with Rental Support Up to an aggregate amount of S$60.0 Rental Support million or for a period of up to 5 years upon Completion, whichever is earlier Underwritten and renounceable Rights Oakwoodood Proposed Rights Premier OUOUE Issue on a basis of 83 Rights Units for Issue Singaporepore every 100 Existing Units in OUE C-REIT (Serviceced Apartmentsnts) Sub-Underwriting Commitment from the Sponsor to subscribe for 66% of the total Proposed Sub- number of Underwritten Rights Units Underwriting Agreement Sub-Underwriting Commission of 1.80% payable to Sponsor by the Joint Lead Managers and Underwriters (1) Valuation of the Properties with the Rental Support by Independent Valuers as at 30 June 2018. OUE Downtown Gallery (Retail) Description of the Properties Overview of the Properties OUE Downtown is a recently refurbished 99-year leasehold title commencing Head Title landmark mixed-use development comprising 19 July 1967 two high-rise towers, being a 50-storey building Total: 752,634 sq ft (OUE Downtown 1) and a 37-storey building (OUE Gross Floor Area – OUE Downtown 1: 161,351 sq ft Downtown 2), as well as a retail podium and a – OUE Downtown 2: 591,283 sq ft multi-storey car park Total: 529,981 sq ft The Properties, being the Grade A office space Net Lettable Area – OUE Downtown 1: 88,400 sq ft from the 35th to 46th storeys of OUE Downtown 1 – OUE Downtown 2: 441,581 sq ft and the Grade A office space from the 7th to 34th storeys of OUE Downtown 2, offer quality and Committed (2) 95.1% efficient column-free office space with regular Occupancy floor plates Weighted Average By gross rental income: 2.0 years (2) Key tenants include Deloitte & Touche LLP, Aviva Lease Expiry By NLA: 2.0 years Ltd and Moody’s Analytics Singapore Pte. Ltd. (2) As at 30 June 2018. METHOD OF FINANCING The Manager intends to finance the estimated Total Acquisition Cost(3) through a combination of debt and equity financing Irrevocable undertaking by Sponsor to subscribe and pay in full for its provisional allotments of Right Units, representing about 55.9% of the Rights Issue size Estimated Total Acquisition Cost Sources of Funding Proposed Rights Issue Acquisition Fee in Units 83 Rights Units Acquisition Fee S$6.8m S$6.8m (1%) Rights Ratio for every 100 (1%) Existing Units New Rights 1,288,438,981 Total Total Units S$955.9m S$955.9m Gross S$587.5 million Proceeds Debt Transaction Purchase Rights Issue Rights Issue S$0.456 per S$361.6m costs Consideration S$587.5m Price Rights Unit (38%) S$41.1m S$908.0m (61%) TERP S$0.570 per Unit (4%) (95%) (3) Excluding the Acquisition Fee which will be paid in the form of Units. RATIONALE FOR THE PROPOSED TRANSACTIONS Strategic acquisition of a recently refurbished Grade A Singapore office property which is primed to benefit 1 from the transformation of Tanjong Pagar into a business and lifestyle hub in the CBD Full suite of integrated amenities to Oakwood Premier OUE Singapore deliver a superior “live, work and play” (Serviced Apartments) environment for occupiers Transformation of the Tanjong Pagar precinct has commenced with the recent completion of new or refurbished premium and Grade A offices, such as the Properties, Guoco Tower and Frasers Tower Provides Grade A office space convenience and Integral part of the The precinct has also developed a OUE Downtown accessibility for bustling hospitality scene with the 1 OceOce development’s “Work” office occupiers completion of Oakwood Premier ComponentComponent vision with international OUE Singapore, Oasia Downtown and employees Sofitel Singapore City Centre on overseas assignments in OUEOUE DowntownDowntown The district also boasts a unique OUE Downtown Gallery Singapore 2 OOcece mix of bars, cafes and restaurants (Retail) Integral part of CoComponentmponent set up by both independent players the development’s and international brand names “Live” vision which satisfy demand from working professionals, residents and tourists, bolstering the “live, work and play” image of the district Gives office tenants direct Easy accessibility and connectivity, access to a wide range of poised to benefit from enhanced food options and lifestyle infrastructure development of the amenities Shenton Way/Tanjong Pagar area Integral part of the development’s “Play” vision CROSS ST CENTRAL BLVD CROSS ST CENTRAL BLVD DDOOWWNNTTOOWWNN MMAARRIINNAA SHENTON WAY/ LeLgeegnedn d BBAAYY OUEOUE Downtown Downtown TANJONG SofitelSofitel So So SingaporeSingapore WAY AsiaAsia Square Square (including(including the the MarinaMarina One On e TowerTowe r1 1 & & 2 2 Properties) PAGAR The Westin MARINA BAY Properties) PAGAR The Westin MARINA BAY CBD oces ENTON WAY CBD oces Frasers SHENTON FrasTowerers SH Capital SHENTON